Google has just announced a major reorganisation if its company structure, as well as a new CEO. Basically, the company has created a sort of umbrella corporation containing all the independent business that (used to!) make up Google. In this new structure, Google is just one company within Alphabet, but so are Alphabet’s other ventures, such as its medical companies, the driverless car company, and so on, and so forth.
What is Alphabet? Alphabet is mostly a collection of companies. The largest of which, of course, is Google. This newer Google is a bit slimmed down, with the companies that are pretty far afield of our main Internet products contained in Alphabet instead. What do we mean by far afield? Good examples are our health efforts: Life Sciences (that works on the glucose-sensing contact lens), and Calico (focused on longevity). Fundamentally, we believe this allows us more management scale, as we can run things independently that aren’t very related. Alphabet is about businesses prospering through strong leaders and independence. In general, our model is to have a strong CEO who runs each business, with Sergey and me in service to them as needed. We will rigorously handle capital allocation and work to make sure each business is executing well. We’ll also make sure we have a great CEO for each business, and we’ll determine their compensation. In addition, with this new structure we plan to implement segment reporting for our Q4 results, where Google financials will be provided separately than those for the rest of Alphabet businesses as a whole.
Alphabet will be headed by Sergey Brin and Larry Page, but Google will get a new CEO in Sundar Pichai.
This new structure will allow us to keep tremendous focus on the extraordinary opportunities we have inside of Google. A key part of this is Sundar Pichai. Sundar has been saying the things I would have said (and sometimes better!) for quite some time now, and I’ve been tremendously enjoying our work together. He has really stepped up since October of last year, when he took on product and engineering responsibility for our Internet businesses. Sergey and I have been super excited about his progress and dedication to the company. And it is clear to us and our board that it is time for Sundar to be CEO of Google. I feel very fortunate to have someone as talented as he is to run the slightly slimmed down Google and this frees up time for me to continue to scale our aspirations. I have been spending quite a bit of time with Sundar, helping him and the company in any way I can, and I will of course continue to do that. Google itself is also making all sorts of new products, and I know Sundar will always be focused on innovation – continuing to stretch boundaries. I know he deeply cares that we can continue to make big strides on our core mission to organize the world’s information. Recent launches like Google Photos and Google Now using machine learning are amazing progress. Google also has some services that are run with their own identity, like YouTube. Susan is doing a great job as CEO, running a strong brand and driving incredible growth.
Possible bonus perk: this is an antitrust lightning rod.
It’s going to take me a while to adjust to this somewhat strange – for now – naming scheme.
I’d be glad if they removed Eric Schmidt from managing their on-line services. His handling of Google Talk / Hangouts was atrocious.
Edited 2015-08-10 21:10 UTC
Time for the old Google to show its true colors. I sincerely hope that they run an ethical business that isn’t strictly focused on short term profit and that shows concern for the little guy. We’ll see. I’m keeping my fingers and toes crossed.
My initial feeling is that this is about preempting anti-monopoly issues. That being said, running such a hugely diverse company under one management is nigh on impossible.
Hate the name though.
Edited 2015-08-10 22:17 UTC
The way I read it is they’re trying hard to not run a diverse company under one management team. This blog post read like something Warren Buffet would write – find good businesses, find good managers, and leave each business operating independently. The umbrella company does capital allocation between the businesses, and starts new businesses, but does so in a way that protects new businesses from being shut down or undermined by larger, more established businesses with a legacy focus.
It subtly shifts the focus from “growing the business” to “growing new businesses”, and once a company gets as large as Google (or Berkshire!) that’s really the only path that can deliver growth.
Or you could be really focused, that apparently works pretty well.
Incidentally I am reminded of this Butterfield classic when I read about all these Google companies:
https://agmetalminer.com/2010/03/05/flickr-co-founder-stewart-butter…
I agree entirely. I meant that the previous structure was nigh on impossible to maintain.
Yes, there’s TWO considerations here, the first being the one you mention – Europe’s boner over “investigating” google in an effort to give the home companies some kind of advantage. This helps curb that. The other is the recent plot by the MPAA and a certain state AG to destroy google. Now you have to target multiple companies to try to destroy google.
Alphabet have none of this “do no evil” mantra so start up the evil empire music!
Samasung manages it. One big parent company and multiple smaller companies within it each doing completely different things. Maybe Alphabet is following that format?
Surely, they missed an opportunity to name it 10^100.
Edited 2015-08-11 00:15 UTC
I welcome this as a new inspiration on designing my new startup.
Everyone is free to dream anything.
You could also name it Ten Ten Two for 10^(10^2).
10 sixteentiallards? Why?
I don’t get the antitrust angle at all. Microsoft’s revenues being distributed among various holding vehicles didn’t appear to help when it fell foul of antitrust legislation in the US, so why should Google be in a better position now that it’s a subsidiary of Alphabet?
Are people here really so simple as to think that an antitrust investigation is going to run aground because the subject has changed its name or ownership structure?
“People here” are only considering it as a possibility, not a certainty. And the possibility that is being considered is not that the investigation will run aground, but that it might be the difference between getting investigated or not. Or at the very least the investigated company will be the canary, while leaving the rest relatively unscathed.
Microsoft’s “divisions” are not separate distinct companies under the law. They’re an internal way for MS to divide the work into logically distinct areas while being able to track what is or is not making money.
Right. This is the same thing, only by turning it into multiple publicly traded companies, Google is (in my mind) attempting to avoid antitrust litigation while also being able to better track their earners and bleeders.
And as others have said, no mention of the long-lost “don’t be evil” mantra here. They are being 100% self serving with this move, which is fine in the sense that a business should be looking out for their own interests, but it sucks that for the past few years Google has been stepping all over their users to do it.
It’s all G(r)eek to me.
Dharma or Tyrell Corporation or Acme would have been cooler (and freakier)
Well, they bought Boston Dynamics, so Tyrell or Rosen would be quite OK
Weyland-Yutani
Alphabet is above Apple.
Alphabet is above Android.
Done.
Then they should have gone with Aardvark.
Google’s claiming Godhood with god-like Omniscience obviously being their ultimate goal.
https://en.wikipedia.org/wiki/Omniscience
Alphabet’s web address hints at this.
http://abc.xyz — Alpha to Omega
https://en.wikipedia.org/wiki/Alpha_and_Omega
Good indicator of where their heads are at. Skynet much?
Alphabet!, though? Good luck snagging/keeping that Trademark.
Edited 2015-08-11 14:44 UTC
If you want to push sinister biblical symbology, give Apple a go.
The Adam & Eve logo?
Pricing that computer at $666?
or are you talking about the most sinister villain of all: Dogcow
Now shareholders can see how much money they burn with everything other than search.
They have been resisting to provide that transparency for a long time but the pressure has finally become too strong.